No Money Down Really

No Money Down - Really?
No money down may mean no down payment .​
That's what most people think it​ means .​
a​ seller actually agreeing to​ get nothing at​ closing is​ rare,​ though .​
Most sellers need something as​ a​ down payment .​
They want a​ little bit to​ show for the​ sale,​ and may even need it​ just to​ cover their closing costs,​ like paying the​ real estate agent.
Also,​ most banks won't finance the​ entire purchase price of​ a​ property .​
This is​ especially true of​ real estate that is​ purchased as​ an​ investment .​
The bank won't loan you 100%,​ and the​ seller needs something as​ a​ down payment,​ so how do you buy real estate with no money down?
By understanding what the​ parties involved really want,​ and giving it​ to​ them .​
The bank wants a​ secure investment,​ meaning the​ property is​ worth more than what they are loaning on​ it .​
The seller may want enough money to​ move,​ or​ may want a​ to​ finance the​ property to​ get a​ good return on​ his equity .​
He may just want all of​ his money out of​ it​ now .​
The point,​ then,​ is​ to​ find a​ way to​ give him (and/or the​ bank) what he wants,​ while putting none of​ your own money into the​ deal.
You see,​ no money down just means that the​ down payment won't come from your own money .​
Where will you get it? Anywhere you can .​
Time to​ get creative.
A No Money Down Example
Recently,​ an​ investor told me that he had found a​ fixer upper,​ but couldn't arrange financing .​
What did he do? He assigned the​ contract to​ another investor who was at​ our real estate club meeting,​ for $6,​000 .​
All he ever had into the​ deal was a​ $500 good faith deposit,​ and this could have been from a​ cash advance on​ a​ credit card .​
The other investor saw the​ potential to​ make $20,​000 on​ the​ property,​ so he was happy to​ pay $6,​000 to​ take this man's position .​
This is​ called flipping .​
The new investor had the​ ability to​ finance the​ deal,​ so the​ seller got his cash .​
The bank had a​ good loan,​ especially considering that the​ home value would be improved with the​ rehabilitation. .​
The key here was that the​ first investor knew how to​ find a​ good deal,​ and he included in​ his offer the​ right to​ assign the​ contract to​ another investor (or take on​ a​ partner) if​ he wanted to.
More No Money Down Ideas
Suppose you wanted to​ complete the​ purchase,​ renovation and sale with zero down,​ and none of​ your own money invested? One way would be to​ find a​ partner .​
We were recently talking to​ an​ investor who wants to​ use our money to​ complete the​ profitable renovation of​ a​ property .​
We would like a​ share of​ those profits .​
If a​ deal is​ good,​ there are people who want to​ bring their money into it.
Here is​ another example .​
Suppose you find an​ owner who is​ tired of​ being a​ landlord .​
He wants $80,​000 for his run-down house .​
With $6,​000 worth of​ clean-up and repair it​ could sell for $116,​000 .​
Your total costs (including closing and holding costs) would be around $11,​000,​ leaving $25,​000 potential profit in​ the​ deal .​
That sounds good,​ but what can you do with no money?
You could offer the​ seller more than he wants .​
For example,​ offer $85,​000,​ using a​ $500 credit card cash advance for a​ good faith deposit .​
Your offer,​ however,​ is​ for $5,​000 down,​ with no monthly payments,​ and the​ entire remaining balance to​ be paid within one year,​ with 7% interest .​
Why should he agree?
As you would carefully explain,​ he'll get more than he wanted - and a​ few thousand in​ interest too .​
His collateral will be safe,​ since unlike his renters who ran the​ place down,​ you'll be pouring money into fixing it​ up .​
He'll have a​ first mortgage on​ a​ home that will soon be worth much more than what he is​ owed.
Okay,​ so he agrees (if not,​ find another seller and another until one does agree) .​
Now how do you find the​ $5,​000 for the​ down payment,​ plus the​ $11,​000 for repairs and holding costs? Find an​ investor who has about $16,​000 to​ put into the​ deal .​
No money down for you,​ and half the​ profits for him .​
Complete the​ house quickly and on​ budget,​ and you'll get over $10,​000 profit each.
Notice that the​ seller gets more than he is​ asking,​ and the​ other investor gets a​ great return on​ his investment .​
You make more than $10,​000 without investing a​ penny .​
Find out what everyone wants and create a​ way for them to​ get it .​
This is​ the​ surest way to​ make a​ deal work with no money down.

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